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Among the three types of business models adopted by financial advisors, wealth management is regularly the most profitable. This does not say that the other two types of business models cannot be very economically rewarding, as a well-structured and executed multi-family office model can probably enable financial advisors to earn the most.

Providing financial expertise to individuals, small-and mid-sized businesses and other organizations such as endowments can be exceptionally both personally and financially rewarding. It is also a challenging career.

In an extensive empirical evaluation of the thought processes and actions of 803 financial advisors conducted by Consulting with R.A. Prince & Associates, three types of business models dominated:

Wealth managers provide a number of different financial services to their clients (28.9 % of the sample).

Multi-family offices add additional expertise to wealth management such as administrative and lifestyle services to a solid wealth management platform (16.7 % of the sample).

Considering the relative profitability – based on the average income of the partners/owners – of the three business models, wealth managers were the most successful. In all the business models, there were financial advisors earning millions of dollars annually. It is just that the relative percentage of wealth managers was greater; slightly more than 10% of them earned U.S. $1 million or more in 2015. About 45% of them annually earned between U.S. $500,000 and U.S. $1 million. Two-fifths were in the U.S. $250,000 to U.S. $500,000 range, and the remainder earned less than U.S. $350,000 annually.

Next in line were financial advisors at multi-family offices. Almost 7% of these financial advisors earned U.S. $1 million or greater. About a third annually earned between U.S. $500,000 and U.S. $1 million; a little more than half earned between U.S. $250,000 to U.S. $500,000 with eight financial advisors working in these firms annually earning less than U.S. $250,000.

Finally, about 2% of investment managers made more than U.S. $1 million annually. About twice as many earned between U.S. $500,000 and U.S $1 million. Nearly three-fifths were in the U.S. $250,000 to U.S. $500,000 range, and two-fifths earned less than U.S. $250,000 annually.

According to Brett Van Bortel, Director at Invesco Consulting and author of The Whole Client Model, “By delving into the structures, including the deliverables of the various business models, best practices become apparent. For example, the financial advisors in multi-family offices that concentrate on delivering wealth management services while strategically outsourcing much lower margin lifestyle and administrative services to external providers earned more than the "average" wealth manager. Also, most of the financial advisors at multi-family offices who are taking this approach earned in excess of U.S. $500,000 annually. What this finding highlights is that the ability to capably implement the business model with attention to expertise and expenses is critical to success.”

Comparing the business models when executed extremely well, the multi-family office – based on financial advisor compensation – is the superior model. However, it is clear that implementing the wealth management model very well is considerably easier resulting in a greater proportion of these financial advisors earning more.